At the beginning of The Canyons, Paul Schrader’s new low-budget noir thriller, which premiered on Monday night in New York, viewers are treated to an eerie slideshow of old, dilapidated movie houses, long ago abandoned. It’s a stark visual commentary on the current state of American cinema, or at least a certain kind of moviegoing culture that once thrived in this country but now, it seems, no longer exists.

Mr. Schrader, 67, the Academy Award-nominated screenwriter and director who emerged from that seemingly faded culture—and whose credits include Taxi Driver, Raging Bull and American Gigolo—believes we are living in a “post-theatrical era,” as he put it in a recent conversation with the Transom. This film, he says, is both a product of and a reaction to that new age.

The Canyons, an icy, violent portrait of psychosexual disillusionment and the soul-crushing realities of the acting business in the 21st century, stars Lindsay Lohan and the pornographic actor James Deen—“both icons from outré culture,” Mr. Schrader noted—and has a screenplay by the novelist Bret Easton Ellis. The film, which will be released in select theaters on Friday and will also be available to at-home viewers on demand, was shot over the course of three weeks last year in Los Angeles and funded, primarily through Kickstarter, with an infinitesimal budget of about a quarter-million dollars.

“Part of the attraction,” Mr. Schrader said of the movie’s DIY ethos, “was the issue of whether this was possible, whether we could pull this off.”

As it turns out, it was—and they did. According to Mr. Schrader, The Canyons has already recouped its costs, and it’s gotten plenty of attention. The experiment paid off, he said, and the movie sets a precedent.

Then again, not every micro-budget indie film can be The Canyons, which generated a lot of buzz due to a now-infamous New York Times Magazine cover article published in January, which vividly details the strained and often, well, theatrical production of the film as it fumbled awkwardly toward the finish line. There were countless kerfuffles with the mercurial Ms. Lohan, who completes a 90-day stay at a California rehab center this week. The title of that article? “Here Is What Happens When You Cast Lindsay Lohan in Your Movie.”

“The article was supposed to be about a new kind of paradigm,” Mr. Schrader said, “and then the focus of the article switched to the new Lindsay. Unfortunately, the new Lindsay never showed up, and it became about the old Lindsay.”

And so a farcical air hangs over the movie—which, almost pornographic in nature, features Ms. Lohan’s breasts and a few penises too.

Mr. Ellis, 49, originally wrote the script in six weeks. He told the Transom that he never intended for the movie to border on pornography. He simply wrote it as “a fast, prankish thriller.”

But Mr. Schrader, who is now making a film with Nicolas Cage, had something more serious in mind: a “chillier and more zeitgeist-y” snapshot of the times. As he lent his directorial style to the story, The Canyons evolved into a slow and very tense movie—in essence, a Paul Schrader film.

Mr. Ellis, who was not originally in favor of casting Ms. Lohan but then jumped on board when he noticed her potential, wrote the script with Mr. Deen in mind.

“I thought, ‘Oh, I forgot, teenage girls are into porn, and this is their idol,’” Mr. Ellis said of the popular adult film star, a heartthrob of sorts who plays a depraved and perverted killer in the film. Mr. Ellis, who now considers the porn star a friend, said he watched Mr. Deen’s sex scenes and noticed something in him that made him seem good for the part. “There was this very cute side to him,” Mr. Ellis noted, “and this dark side that came out in the hardcore BDSM scenes he does.”

It’s hard not to furrow your brow at that explanation—and the casting choices in general—but they’re no joke, according to the filmmakers.

“Everyone likes to think that this is stunt casting,” Mr. Ellis said, referring to Mr. Deen and Ms. Lohan, who are both 27. “The fact is that they were both the best for these roles.”

Ms. Lohan, who plays Mr. Deen’s embittered and sexually submissive girlfriend in the film, has had a rough bunch of years. But the actress who showed so much potential in Mean Girls and Robert Altman’s last film, APrairie Home Companion, shows that she still has talent—though Mr. Schrader often had to yank it out of her.

“I think that’s part of the reason Lindsay does work as well as she does in this movie,” Mr. Ellis said. “I guess she trusted Paul. They had a very fraught relationship, but they were very close, too. Paul can, for all his gruffness, be very paternal.”

Mr. Schrader and Ms. Lohan still keep in touch, texting every week or so. Does he see himself as a father figure to her?

“I would like to. One of the seductive things about Lindsay is that she makes you believe that you can make a difference in her life,” Mr. Schrader said, adding: “I wish I could be of more help, but in the end, she has to do it. No one’s going to do it for her.”

The bonds that formed during that three-week shoot last year may indeed be long-lasting, but Messrs. Schrader and Ellis both agree that they’re lucky to have gotten through it relatively unscathed. Neither of them has plans to repeat the process.

“My feeling right now is, I went into the casino and put everything on red, and it came up red,” Mr. Schrader told the Transom, “and if I had any brains, I’d get out of the casino.”